Markets & Finance

Eighteen Stocks to Dodge


S&P's latest screen identifies companies that score low in both analyst rankings and Fair Value

From Standard & Poor's Equity ResearchKnowing which stocks to stay away from is just as important as knowing which stocks to buy. This week's screen searches for stocks in the S&P 500 that S&P believes investors should avoid, based on two methodologies.

We first searched the list of 500 large-cap names for those ranked 1 STAR (strong sell) or 2 STARS (sell) by S&P equity analysts. STARS, or Stock Appreciation Ranking System, is our qualitative methodology based on fundamental research conducted by S&P's own analysts.

Next we narrowed the list to names that carry S&P Fair Value rankings of one (significantly overvalued) or two (somewhat overvalued), according to our proprietary quantitative stock ranking system. S&P's Fair Value Model calculates a stock's weekly Fair Value—the price at which it should trade at current market levels—based on fundamental data such as corporate earnings and growth potential, price-to-book value, return on equity, and current yield relative to the S&P 500.

When our screen was completed, these 18 names popped up.

Company

S&P STARS Rank

S&P Fair Value Rank

Avalonbay Communities (AVB)

2

1

Bausch & Lomb (BOL)

2

1

Block (H&R) (HRB)

2

2

Countrywide Financial (CFC)

1

2

Dollar General (DG)

2

2

Eastman Kodak (EK)

2

1

Gap Inc. (GPS)

2

2

General Motors (GM)

2

1

Janus Capital (JNS)

2

2

KB Home (KBH)

2

1

Lennar Corp. (LEN)

2

2

Novell Inc. (NOVL)

2

1

PG&E Corp. (PCG)

2

1

Qwest Communications (Q)

2

1

RadioShack Corp. (RSH)

2

2

Sara Lee (SLE)

2

1

Wendy's International (WEN)

2

1

Yahoo Inc. (YHOO)

2

2


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